Apartments vs Office buildings

[Michael Nguyen]

Hello, I'm currently researching about commercial properties and was wondering if anyone could give tell me the pros / cons of having one over the other. Which do you think is a better investment and why? 

Thanks, Michael.

[Jon Mauro]

There is sooooo much to discuss when comparing the two. I think it is very difficult to sum up in a quick response. The short answer I would offer is that you cannot say one is better or worse than the other. It really depends on the individual property. I think multi-family is lower risk in general if you have a larger number of units. You likely won't encounter major vacancy issues and you can always reduce the asking rest to fill vacant units. Office property is a completely different animal influenced by different factors. If I had to pick one, I would choose the property type that is more in demand in your market for the next 5 years. Multifamily has been the preferred property type for the last 5 years but Class A has become overbuilt in some areas. Personally, I would stay away from any Class C office property. I think you can run into high maintenance short term tenants and get into extended vacancy issues. In addition, your pool of lenders will be smaller as many banks won't want to deal with lower stock office.

I would narrow down your question in order to facilitate useful replies.